After holiday, money gripes

PERSONAL FINANCE

By now, friends and family have probably ripped open presents and let out a chorus of thank-yous.

Yet it's a good bet that someone is unhappy.

Maybe a brother feels slighted by receiving a recycled gift. Or maybe you're simmering over a sister's penny-pinching.

"Someone will be resenting the $3 picture frame from the drugstore, while everyone is giving $25 gifts," says Leonard Schwarz, who writes a column with his wife on money, ethics and relationships for Money magazine.

Will anyone complain? Not likely.

Money is a touchy topic among strangers. It can be even touchier with friends and family.

We want to be generous or help out those we love, but we don't want to be taken advantage of, either. Yet even when we are treated like a doormat, we're reluctant to object, Schwarz says. We don't want to seem petty or initiate what's sure to be an uncomfortable conversation.

Indeed, given the choice of catching the flu or having a relative ask for a large loan, two-thirds of us would choose the coughing and sneezing, according to a survey by Schwarz and his wife, Jeanne Fleming.

Schwarz and Fleming have been dispensing advice in their column "Do the Right Thing" for four years. They're now focusing on money problems among family and friends in a book due out next month entitled Isn't it Their Turn to Pick Up the Check?

Apparently, many of us can use the advice. More than one-third of 800 people surveyed has a moocher, freeloader or deadbeat in the family. Nearly half are related to a cheapskate.

Those numbers were slightly lower among friends. (Then again, we choose our friends, not our family.)

Not sure if your father is a cheapskate or a tightwad, or whether your cousin is a freeloader or a moocher? There are differences, the couple say.

"A tightwad doesn't want to go to lunch with you if you go to an expensive restaurant," Schwarz says. "A cheapskate is happy to go to an expensive restaurant if you are paying."

A freeloader is the guy at your party who drinks all your good scotch and scarfs up all the jumbo shrimp. A moocher is more calculating, Schwarz says. For instance, he might drive across country on vacation, making sure he shows up on friends' doorsteps just as they are sitting down for dinner.

Even though we might not like talking about money with friends and family, we do think about it, the authors say. We often size each other up on how much each earns and how generous each should be. So if you get a promotion with a big raise, for instance, friends might assume you should pick up the restaurant tab from now on.

It's not just those with less money who behave poorly, either.

Fleming recalls a complaint about a "successful" sibling who insisted on making an annual videotape in which each family member recounted his or her triumphs over the year. Christmas letters can be burdensome enough, Fleming says. "This is really about a rich sibling behaving pretty badly," she says.

Fleming and Schwarz say you have no absolute obligation to financially help out friends and family.

One common way we show our generosity is through loans, which can be a source of trouble.

"We asked people whether they were repaid on their largest loan," Fleming says. "Half of them don't get all their money back. Almost a third get none of it back."

That's not the only problem. Disputes can arise when recollections fade about loan terms. You might think your friend agreed to repay the loan within one year; he recalls he has two years.

Prevent problems by writing down the terms of the loan. You only need a few sentences, stating the amount borrowed, when it will be repaid and whether or not interest will be charged, the authors say. And once the loan is repaid, write that down on the agreement so there's no question about that later.

Sometimes gifts come with strings attached. Most people say attaching conditions to a gift is wrong. But Fleming and Schwarz say strings are not unethical as long as they are not outrageous, manipulative or exploiting someone's financial desperation.

"The person can always say no" to the gift if she doesn't like the strings, Schwarz says.

Also, don't make promises that you're not going to keep just to get money. "You can't make promises betting that you won't have to live up to them," Fleming says.

So, what do you do if your relatives or friends take advantage of your generosity? Many times they are counting on you not to say anything, the couple say. But sometimes you must confront those treating you like a pushover. And the earlier you do it, the better.

"Nip it in the bud," Schwarz says. If you wait too long, for instance, then the friend who has gone months without repaying a loan might assume that it was a gift.

Be clear and direct, too. "We're not into hinting," Schwarz adds. "There are too many thick-skinned people."

But always be nice. After all, you still want a good relationship.

Questions? Comments? Want to share your own financial tips with readers? Contact Eileen Ambrose at 410-332-6984 or by e-mail at eileen.ambrose@baltsun.com.